Publix Is in Good Position for 2013

Saturday

Feb 23, 2013 at 11:46 PM

Lakeland-based Publix is scheduled to release its fourth quarter and full year 2012 financial results Friday. Looking back, 2012 was another year marked by growth and innovation for the 83-year-old supermarket chain.

By KYLE KENNEDYTHE LEDGER

LAKELAND | Publix Super Markets Inc. appears to be on track for a very successful 2013.That was the prevailing message from supermarket and retail experts interviewed by The Ledger to discuss recent Publix ventures and the company's prospects for 2013.Lakeland-based Publix is scheduled to release its fourth quarter and full year 2012 financial results Friday. Looking back, 2012 was another year marked by growth and innovation for the 83-year-old supermarket chain.Publix raked in a profit of $1.2 billion in the first nine months of the year, up 6.1 percent from the same period in 2011. Sales through the third quarter increased 3.9 percent to $20.5 billion. Publix debuted in the Knoxville, Tenn., market in 2012 and announced an expansion into the state of North Carolina, the first such expansion since Publix entered Tennessee more than a decade ago.The company continued to experiment with its store formats and began testing an online deli ordering system in select locations. Locally, Publix opened the area's first Aprons Cooking School at the Lake Miriam Square store in Lakeland; the store also is the first in Polk County to include the Aprons Event Planning service.More recently, Publix has deepened its push into social media by formally joining Twitter earlier this month, and is currently in the process of rolling out a digital coupon system across all stores.Things are looking bright for Publix in 2013, according to the experts contacted by The Ledger, though they say Publix and other grocers will still have to deal with myriad economic pressures.(Publix did not respond to requests for comment on this story).

DAVID LIVINGSTON, DJL RESEARCH"Publix is sitting really good right now. They've stayed focused," said Livingston, a Wisconsin-based supermarket analyst and consultant. "They're sitting back and waiting for the other competitors to make mistakes."Livingston says Publix is a rare example of a traditional supermarket chain still thriving in Florida. Albertsons shuttered most of its remaining Florida stores last year and Tampa-based Sweetbay has closed 33 locations around the state (including the North Lakeland site), leaving the company with 72 stores.Though general retailers such as Target have been adding fresh foods (including in Lakeland), and chains such as Whole Foods are slowly expanding in Florida, Livingston doesn't expect them to be much of a threat to Publix.But what about Wal-Mart, which has been comparing its food prices against Publix's in television ads running in the Tampa area?"I think Publix is trying to be very competitive on their high-volume items. They don't have to have the lowest prices ... they don't have much to worry about Wal-Mart," Livingston said. "This is one company that's been able to grow and thrive since Wal-Mart came into the market, and they've used Wal-Mart as muscle to drive out the other competitiors."Publix has positioned themselves in such a sweet spot that they don't have to be constantly looking behind them," Livignston said. "But Publix does and that's why they're good."

JON SPRINGER, RETAIL EDITOR FOR SUPERMARKET NEWS"Not every chain is growing. I think it says something that Publix is still finding ways to grow, both in their own territory in Florida and the Deep South," Springer said. "They're one of the companies that has consistently been growing organically in new markets."He says Publix is making a bold move with its expansion into the Charlotte, N.C., market — with the first store scheduled to open in early 2014 — and Springer noted that one competitor in the area, Matthews, N.C.-based Harris Teeter, is considering a possible sale. That might create opportunities for Publix as the grocer gets settled in Charlotte, Springer said.As for potential challenges in 2013, Springer said Publix and other supermarkets could see shoppers cutting back if food inflation becomes an issue."If you're paying more for chicken and beef you have less left over for other things in the store," he said.

MEG MAJOR, EDITORIAL DIRECTOR FOR PROGRESSIVE GROCERMajor says the supermarket industry also could be impacted by the payroll tax increase that went into effect this year. A Bloomberg report last week cited internal emails from Wal-Mart Stores Inc. executives partly blaming the chain's weak February sales on the tax increases. Analysts interviewed by Bloomberg said the higher payroll taxes could affect a variety of retailers and keep pressure on consumer spending."The payroll tax is definitely going to be a trend, I think, certainly in these first quarter numbers for all retailers. It's going to impact discretionary spending in supermarkets," Major told The Ledger. "At the same time, gas prices are surging, upwards of 50 cents in the past 30 days. Cost of fuel also is a big factor in discretionary purchases."On another topic, Major said it bodes well for Publix that the chain has continued to revamp its older stores and cater to shoppers' demands for offerings such as prepared foods."It's very critical for grocers these days to keep their stores fresh and modern, updated with all of the specific departments customers are looking for," Major said. Publix's growing presence on Facebook and Twitter is another smart move, she said."It's advisable to be as responsive (to customers) as possible," Major said. "People have very strong opinions about supermarkets and they have very specific expectations."

PAT FITZPATRICK, PRESIDENT OF ATLANTA RETAIL CONSULTINGLike Major, retail consultant Pat Fitzpatrick says Publix is wise to continue investing in its stores.He noted the December re-opening of a remodeled Publix "prototype" store in Longboat Key that features unique product displays, indoor and outdoor dining areas, and an expanded selection of specialty items and organic foods.Also, Publix reportedly will replace a store in Tampa's Carrollwood area with a new model that featuring a sit-down coffee shop and a large array of organic foods, specialty cheeses and body-care items. Such efforts should help Publix stay in touch with more adventurous shoppers, Fitzpatrick said. He said similar concepts have worked well for Whole Foods. "Publix is obviously experimenting with and trying to find a format — as every successful retail organization does — that will continue to add zest and appeal to the brand name," Fitzpatrick said.He sees Publix's current focus on digital coupons — which allows customers to select coupons online and redeem them at checkout through an account tied to their phone number — as another example of following popular trends."We've got retailers out there that are searching for ways to use technology more aggressively. They're looking for more ways to link to the customer," Fitzpatrick said.

[ Kyle Kennedy can be reached at kyle.kennedy@theledger.com or 863-802-7584. ]